IT will be disappointing if India delays converging its accounting principles with the International Financial Reporting Standards (IFRS), says Jeremy Newman , global CEO of the worlds fifth largest accounting network , BDO International . Newman says the benefits of IFRS will outweigh the costs of implementing the new accounting regime. Newman spoke with ETs Anuradha Himatsingka on the impact the new regime will have on Indian companies. Excerpts:

Why is IFRS vital for India?

It is generally accepted by all that we need a single global set of high quality accounting standards, indeed this is a stated aim of the G20 (Group of 20). This is particularly important for companies that have global operations and need to have a standard set of accounting rules. It is also important for capital markets to enable fair comparison between the performance of companies in different markets and countries. Thus, it is important for countries that have global businesses operating in them and for countries that wish to actively participate in global business, such as India. IFRS is the only set of standards that is widely recognised on a global basis, hence its important to global business and to India.

Is the cost incurred in implementing IFRS justified?

Evidence from those countries that have adopted IFRS indicate that with proper planning, the costs of implementation are modest and are certainly justified by the benefits . Some countries do not require the adoption of IFRS by SMEs (small and medium enterprises ). It may be appropriate for SMEs that are domestic businesses and who are not raising capital.

Will selective relaxation of norms undermine the purpose of the new regime?

It will be disappointing if India delays the implementation of IFRS. I am not aware of any reason why it should do so. Ideally, there should be no relaxation of IFRS as it can undermine the objective of having a single global set of high quality accounting standards.

Ever since the Satyam scandal, there has been a debate over third party audits and rotation of audits...

Mandatory rotation of audit firms and third party audits are not the solution. India needs to re-examine its system of regulation of auditors and introduce an independent regulator as has been done by Europe , North America, Japan, Australia and many other countries.

Why have stakeholders in India been reactive to changes in regulations?

This is not unique to India. In many cases, regulation is a reaction to an issue.Forexample,themajoroverhaul of regulation and establishment of independent regulators in Europe and the US was in response to the crisis following the collapse of Enron, World Com and other accounting scandals. Others are again looking at regulations following the global financial crisis. It is vital that India brings its regulatory processes up to date to match those of other major economies.

An increasing number foreign firms are tying up with Indian auditors. This trend is more visible between mid-level foreign and Indian firms. What will you attribute this to?

Audit firms need access to global resources a global audit methodology , IFRS advice, as well as best practice from more developed accounting firms. This can best be achieved by joining an international accounting network, such as BDO. As Indian companies become more global and as non-Indian companies invest in India, it is vital for audit firms to be part of an international network to enable them to properly meet the needs of such companies.